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BRI and FOIP: Politicizing Investments

The Asia-Pacific Region (APR) is experiencing a surge of connectivity initiatives. China’s ambitious Belt and Road Initiative (BRI) is now accompanied by the Free and Open Indo-Pacific (FOIP). There is also the upcoming Asia-Africa Growth Corridor being promoted by Japan and India.

The simultaneous implementation of various connectivity projects is good news for the region in several respects. Besides creating new infrastructure capacities, particularly maritime ones such as ports and logistics hubs, the connectivity projects also are going to create new supply chains, not to mention rejuvenate existing ones. But if this is the good news, there are prominent downsides, too. The most important of these is the possibility of connectivity projects creating new security alliances along geopolitical lines. The United States (US)-led FOIP, in several respects, is a strategic counter to China’s BRI. Indeed, the FOIP’s articulation leaves little doubt about the US’s intention to obtain deeper market access in industries such as energy, digital commerce, maritime infrastructure, and high-technology industries that expand strategic influence. If China and the US shape the BRI and FOIP as economic projects aiming to counterbalance each other’s future strategic influence in the APR, then this is bound to impact regional business. It is possible Chinese companies, sensing the geopolitical rivalry, might increasingly begin making foreign direct investment (FDI) and production decisions that are focused more on China’s regional allies. For its part, the US might expect its partners to do likewise in the FOIP. The problem will be for those countries that get caught in the crossfire. Many countries from Southeast Asia, South Asia, and Africa might begin getting identified by US and Chinese companies as friendly or unfriendly in investment decisions, on grounds that are unclear to these countries. Such a politicized labeling of countries and channeling of FDI would be unfortunate.